Eldon-Online

Travels In China ... Part Two (by Paul Eldon)

2009-07-13T15:40:22+08:00

Bamboo branches and the pandas who eat them

The next stage of our journey moved us deeper into the country to south western Sichuan Province. Known for its spicy cuisine and more recently, tragically, as the epicentre of the devastating earthquake of May 2008, Sichuan – specifically Chengdu and the Giant Panda – is one of the country’s biggest draws. It was primarily for the endangered bear that we travelled to Chengdu because, to be fair, there’s not much else to write home about in the regional capital.

After the relatively modest accommodation afforded in Yangshuo, and before we headed into deepest, darkest Xinjiang, I decided that a couple of nights at Chengdu’s Kempinski Hotel wouldn’t do us any harm. A number of contributing factors had led me to this particular establishment, primary among them its proximity to the Chengdu chapter of my favourite watering hole – The Bookworm. Chengdu is very much a “modern” Chinese city; it has its luxury brand stores (Gucci again topping the list), top 5 star hotels (enter, stage left, The Kempinksi, Shangri-la and Sheraton hotels) and…a giant statue of Chairman Mao in People’s Square. The Great Helmsman stands there, resplendent in flowing winter overcoat and waving in silent benediction to the masses, most of whom are not even aware of his presence. Like I said, a modern Chinese city.

On the Thursday morning we rose early to go to the Chengdu Panda Breeding Research Center, only 30 – 45 minutes from the hotel. More famous is the Wolong Panda Reserve, but at 3hrs out of the city it didn’t seem practical to visit. Not when you consider that Panda’s are essentially lazy creatures who tend to doze off mid-morning after their breakfast. I know how they feel! So off we popped with our driver, Mr Zhou (I think that was his name – it could have been Chou but he spoke Mandarin with a regional accent so it was hard to tell) who helped us gain entry into the centre (they spell it one way, I another) with a wodge of 2008 tickets. I love China. People can be so resourceful when they have a surplus of something (former U.S. President George.W. Bush might want to take note).

It wasn’t long before we caught a glimpse of our first Giant Panda. They really are terrific animals and, a little like an ice-cream on a hot day, never fail to bring a smile to your face. Having said that, it’s little wonder they’re on the WWF endangered species list. First of all, they’re quite solitary animals and tend to not enjoy the company of others. Secondly, in a cruel twist of fate, they’re essentially herbivores with the digestive tract of carnivores. You have to wonder if God was tired at the end of a long day and added the panda to his “Let’s See What Happens If…” list, joining salmon and their ritual of reproduction. And nothing puts a smile on your face than the sight of nine or ten panda cubs falling over each other as they romp around their enclosure. There was an option to have a photo taken with a baby panda (I paid for the privilege of holding a koala once when in Australia) but the exorbitant cost put me off somewhat. In related news it apparently costs approximately US$1m per annum for zoos to “hire” a panda. Expensive beasts.

After a while though the smile begins to fade, the ice-cream melts or your wine gets warm. Either way, you’ve had enough. So we headed back into town to spend the afternoon resting before an evening sampling the local speciality – hot pot.

I am a huge fan of hot pot. Many aren’t. My partner Daniel doesn’t see the point or nutritional value of eating boiled meat but then he’s not right all the time. However, on this occasion there was a slight problem which dawned on me after we sat down in a chain restaurant that I knew from Beijing. I had never ordered hot pot in my life. Not once. Every time I’ve been out for it someone else has ordered for me and so, although I could read the menu well enough, I had no idea what anything was! Luckily no-one else in the Group had the faintest idea what to expect anyway so it wasn’t very hard to make believe that everything I ordered was normal. The cow’s stomach was harder to cover up but, naturally, I got out of it by arguing that what I had said was “I don’t want tripe” and clearly the serving staff had simply focused on the fact that I had said “tripe”. It’s easy to get confused when foreigners speak Chinese don’t you know? A total disaster from my point of view and a clear indication that the next time I go for hot pot I should pay attention to whoever orders.

To end the piece and, to go full circle, we found ourselves in The Bookworm after supper for a much needed gin, beer, wine and brandy. There is something tremendous about an establishment that can give you the same feeling upon entry as the more familiar venue located over 1,100 miles away. I would also like to take this opportunity to point out that The Bookworm in Chengdu and, specifically Pete Goff (The Bookworm co-owner) played a pivotal role in relief efforts after the May 12 earthquake. More information here: Sichuan Quake Relief. Such a great place.

“China Experience” Rating: 10/10

How could you not give it 10/10? There’s luxury brands, iconic pandas, the (usually not-disastrous) dining experience…and Chairman Mao.

Who Wants To Be A ... Non-Executive Director?

2009-07-11T21:26:34+08:00

"Be careful what you wish for - you may just get it" is now well established as a cliché. But how appropriate it is, when applied to the role of the Non Executive Director today.

It was not that long ago when being invited to join the Board of a prestigious company was considered to be an honour, but often where the duties of a director were not particularly onerous. Even if the company was progressive, and recognised the benefit of good external advice. And of course there were plenty of the "old boy network" Boards where your role was to remain silent, and agree with the Chairman as directed. Today, however, if you wish for and receive that Board seat invitation take care; it may just come and bite you in unpleasant places.

As more and more companies globally are required by legislation to have non-executive directors, you may still find situations where the Board is not really clear on your role, and many first time directors are not really clear on their responsibilities. Or put another way, in an article by British dealmaker Jo High

"For some organisations, particularly owner managers, a Non-Executive Director (NED) has much in common with a Bidet! Being something one quite fancies but not really something one is clear on how to use!"

Examine the role of the NED today, and particularly the Independent NED. A person who is required, often by law, to take as much responsibility for the running of company as an Executive Director, but to do so on a part-time basis using whatever information they are "fed". And in times of trouble, a NED trying to hide behind claims of receiving "insufficient information” is unlikely to receive much sympathy from shareholders and the media alike. Instead, they are more likely to face accusations of incompetence for failing in their duties. "Given your experience", the critics will say. "you should have known what questions to ask!"

Why would anyone willingly subject himself or herself to such reputational and professional risk?

The whole issue of Board Members is under review around the world. Collapsed financial institutions are having their Boards reviewed - and often replaced! Corporate Governance issues today are much more a feature of Board deliberations than ever before. And rightly so, given the apparent inability of some of our most highly paid and high profile corporate leaders to be trusted to tell the whole truth. Boards are now required to look at major appointments, strategy, and performance. They need to consider, in depth, the audit and remuneration issues faced by the company. And they do so on behalf of the shareholders who, independently, they represent.

As a result, non-executive directors are finding it necessary to restrict the number of appointments they accept and therefore the supply is becoming scarcer.

Hong Kong was, perhaps, initially not as quick to make changes as fast as some other places, but there have been improvements. Activists like Christine Loh and David Webb have actually achieved quite a lot in this arena - one quietly and steadily, the other in a more publicity seeking manner, - but love them or loathe them (and I don't actually loathe David Webb - I just don't particularly like him since the day he publicly questioned my independence and therefore my integrity - a question I was happy to successfully refute), they have been catalysts for change. Long may these changes continue, but I still have two concerns.

Some companies in Hong Kong still pay their Non-Executive Directors way below appropriate compensation, given the levels of responsibility they now have to bear. No longer can one be expected to sit on this board or that committee just for the "honour". Appropriate remuneration is now required to compensate for the considerable amount of time-consuming work involved, and which carries severe penalties and "inconvenience" for not doing that work.

And what inconvenience! A friend of mine sits on a select few Boards. He is conscientious, careful, professional, and the sort of person I would be pleased to share a Boardroom with - but a company with which he was involved ran into some financial difficulties. The next thing he knows is that the Police are all over his home, in his absence. In fact their presence was announced by way of a mobile telephone conversation, from the police, telling him they were in his home. No courtesy, no consideration for the individual. They took away papers - relevant or not. They took away a computer - relevant or not. No questions. No apologies. He was treated with the same level of disdain reserved for a hardened criminal.

The fact is, being a non-executive director today requires careful thought and consideration by the individual concerned. You need to represent the shareholders best interests, and you should be able to bring something useful to the company in addition to good corporate governance - a skill, a knowledge base. Your boardroom should be one that is willing to listen and record deliberations or contributions from the directors, and one that understands that today's non-executive directors are not window- dressing.

Korea...North and South...Two Countries - Two Systems

2009-07-08T01:58:31+08:00

On a very recent visit to South Korea I was struck by an air of calm in Seoul that I had not witnessed on previous occasions immediately following a period of North Korean sabre-rattling. As a general rule, when you are living in a capital city less than 30 kms away from someone with whom you are still technically at war, you are bound to get nervous. And on this occasion there had been some actual rockets fired.

The reason for the apparent calm was explained to me as being a result of the strong support being shown to the South by the USA in particular. A comfort that foreign powers were going to keep a close watch on behalf of the M B Lee Government. In addition, China has appeared less inclined to side with the North as they may have done previously. Recognising, perhaps, that they too are now probably as much at risk from a madman's possible mistakes as South Korea.

The North has clearly tried to "up the stakes", but is this an act of desperation disguised as bravado? Perhaps they are concerned that its starving population might just get enough combined strength together to create "difficulties" for the Kim dynasty, although it is hard to see how this might happen in the repressive communist state. Or maybe this is Kim Jong-il trying to "appeal" to the Americans, or anyone else for that matter, to let him have some money... or else! If so, he's got a darn funny way of going about getting any kind of support.

Or is he, for some reason other than a mental meltdown feeling somehow rather confident? How, for example, is he getting enough money to build new weapons of mass destruction? I am sure there are many people out there who have access to more possible answers than I have, but at the front of my own thoughts is the question - who else might be willing to lend a hand in creating nervous tension in the region? It would have to be somebody with money, and a desire particularly to destabilise any potential western influence in the region. And here I keep coming back to Iran as a potentially willing collaborator. Food, perhaps, for thought if not for Mr. Kim's starving population.

Whatever the North wishes to do politically, undiplomatically or whatever, the rather unusually calm South nevertheless has had its own issues to deal with, but the support coming from external forces takes some of the heat off needing to focus solely on the North.

The South's focus has, therefore, continued to be more business oriented, and I must tell you that, although it may not yet be apparent to the outside world, there remains a strong commitment by the Lee Government to open up the market to foreign companies and investors.

This Governmental commitment is not always reflected within South Korea generally where businesses still have some way to go in accepting the overall concept of more open markets. Market protectionism, which features in many of M B Lee’s speeches as being something that must not be pursued by Korea, nevertheless suits many if it protects their own industries and jobs – and it is a fact of life that it is a common theme in many countries. But you cannot have it both ways. You cannot close your markets to others, yet expect markets elsewhere to remain open to your goods and products.

By the same token, therefore, is it okay to close your markets to foreign business yet be willing to openly accept foreign support against a potential aggressor? Okay, so the USA has a security interest in being somewhere in the region, and Korea is a large presence for them, so their willingness to support the South may not totally altruistic. But it nevertheless remains an argument.

So what is the point of all this?

North Korea is becoming increasingly and worryingly belligerent, possibly supported by outside forces and maybe concerned about the plight and possible reaction of its starving population. South Korea on the other hand, is pressing ahead with plans to open up its economy, and is being allowed to do so as it faces less pressure from the North.

So what about in exchange for giving up its nuclear weapons arsenal, North Korea opens up to foreign investment in the same way that its communist neighbour, China, has done so successfully. Step by step. But guided by the South. They speak the same language. They have the same ethnic background. They could follow the format of another experiment further south, of One country – Two systems. It would be a start, but perhaps it will take a real change of attitude, or leader, in the North to come anywhere close.

Travels In China ... Part One (by Paul Eldon)

2009-07-05T10:32:24+08:00

In May 2009 we persuaded Paul, our second son, to take us up to North West China. This is his side of the story.

Seven People, Six Cities, Four Provinces, One Autonomous Region...

and a Uyghur called Patti.

Having lived in China for the past eight years but never having traveled around the country, the two-week round-trip journey from Hong Kong via Yangshuo (Guangxi), Chengdu (Sichuan), Kashgar, Turpan (Xinjiang), Dunhuang, Jiayuguan (Gansu) and Xi’an (Shaanxi) was probably the closest I was going to get to what might be described as the “China Experience”. This is a term thrown about by pseudo China commentators regularly; what qualifies as an “experience” anyway? Is it something cultural and rather esoteric, or can that prolonged and awkward visit to the bathroom after a particularly potent hot-pot also be termed a “China Experience”?

I went to China in 2001 to study the language. Not because I had a deep seated desire to immerse myself in Chinese culture, nor because I wanted to report on the living conditions of China’s mega-population of peasants. The BBC’s regular misrepresentative and painful to watch “exposé’s” do just fine in that regard. It was simply because I recognised that a working knowledge of Mandarin might come in useful in the future.

It is not my place to comment on Chinese society in comparison to Western society. They are so different that you cannot objectively compare the two without sounding either smug or trite. I am staggered by the number of people who write books about life in China after spending just a few months (and sometimes only weeks) in the country. I am simply a man who moved to Beijing for my own reasons, was delighted that I enjoyed living in the city, and ultimately set up shop there for most of the next decade. Having said that, as I had only previously travelled to Shanghai, Qingdao, Shenzhen, Dongguan and Shenyang, I was very much looking forward to the trip around the People’s Republic if only because from what I’d seen and read, the Xinjiang Uyghur Autonomous Region was the closest thing you’d get to a Central Asian experience without needing another visa. That I was going to be able to strut in front of my parents, godparents and family friends like a peacock in full bloom using what I’d learned in the Northern Capital was a boon. You see, I’m a bit of a show off as anyone will tell you who ventured into The Bookworm in Beijing on a Monday night for our weekly (award winning) pub quiz, or on the second Thursday of the month for our equally popular Basically Beethoven classical music open-mic evening. After each leg of the journey I shall rate each place on a “China Experience” scale of 1-10 with 1 being as Chinese as cheddar cheese and 10 Modern Communist China in all its red glory. (If you can’t beat ’em, join ’em!)

So, to the trip.

We began our mini adventure on a Sunday morning as the retired population of Hong Kong set out to do their morning Tai Chi. We were to take the train into Guangzhou, fly to Guilin and then transfer by bus to Yangshuo. All up it took us the better part of a day but the distance we had traveled? Hardly anywhere. China is a vast country and, if we’re simply using climate as our guide, we might as well have been in Hong Kong’s New Territories. But unlike the New Territories, the topography of Guangxi is, simply, breathtaking. If you think about classical Chinese painting you either get the Taoist mountains of Shandong coming to mind, or the rugged and rippling terrain of Guangxi. Indeed, near Yangshuo in the village of Xingping the picture used for the reverse of the ¥20 RMB note was taken. Friends of mine who have been in China since the early 1990s tell me of a time when Yangshuo was a quiet fishing village with a couple of restaurants and maybe one or two places to stay. Not so today.

We stayed at a nice little place - The Rosewood Inn (which I’ll give 3 stars to for their rooms but 1 star for their breakfast), a semi-boutique style hotel and one of a small handful in the village. The hotel’s manager, named by the Group as “10% Sam” is a businessman originally from Hong Kong but who has lived in Yangshuo for the better part of the last 10 years. Never let it be said that Hong Kong businessmen can’t spot a good deal when they see one because dear Sam now runs an entire strip of restaurants on one of the busiest streets in the village. Yangshuo still has a romantic feel to it, helped along by the mist, the mountains and the cormorant fishers, but make no mistake – this is a tourist destination and the irritating “guides” pressing you every waking minute to go with them to see the “real” countryside, or sell you goods and services “very cheap” can get tiresome.

The Group ventured out on its own on long bicycle rides, into the food market and down the river on bamboo rafts. We included a visit to the extraordinary sound and light show held twice nightly on the outskirts of the village. Zhang Yi Mou (director of the excellent film Raise The Red Lantern – one of the first foreign language films I saw and one of my all-time favourites, and Artistic Director for the opening ceremony of the 2008 Beijing Olympic Games) has come up with a huge spectacle using the surrounding scenery as his stage and about 300,000 people and a similar number of light bulbs to create, at least in my opinion, a vulgar and thoroughly dull 60 minute show. Some people like it. I didn’t. (I didn’t really like the opening ceremony either but, as you will have read in an earlier post on this blog, for those who were actually there on the night it was a quite different experience to watching it on television).

“China Experience” Rating: 8/10

It’s China alright, from the picture postcard scenery and interesting dining (Pijiu Yu or “Beer Fish” is a local speciality) to all the bells and whistles of a country tourist destination.

WMD; Weapons Or Words?

2009-06-27T19:36:50+08:00

The term WMD, in recent history, came to be known as an abbreviation for Weapons of Mass Destruction. Those things that the Americans said existed in Iraq, who dragged the British along with them into a war which rid the world of a dictator, but left a legacy of internal conflict in the country that shows no signs of abating. Oh, and just as an aside there didn't seem to be any WMDs - strange that!

On the other hand we have the North Koreans who most definitely do have WMDs, and a dictator, but nobody seems terribly interested in knocking him on the head and giving that country a chance of escaping from abject poverty and starvation. Where's the justice in that - or did everyone wake up to the idea that invading Iraq under some pretext or other was just wrong? Mind you, Iraq had oil - North Korea doesn't.

But it occurs to me that WMD could just as easily stand for Words of Mass Destruction - at least in Iran most recently where some bloodthirsty cleric is proclaiming that all rioters should be executed.

To re-cap, there can be few people in the world today, civilised or otherwise, who believe that the recent elections in Iran were fair and just. Of course, it is quite possible that both sides were trying to rig the ballot boxes, but there are just too many anomalies in the results to believe that the incumbent President won the election by anything like the claimed majority. He might have won, I cannot comment, but certainly not by the proclaimed majority.

The strength of negative feeling from the opposition within Iran, and from Iranians outside the country, is massive and powerful. They have been giving vent to their feelings, and show little appetite for remaining silent - almost at any cost. Which leads me to ponder on the words of the Islamic Cleric Ahmad Khatami, a known hardliner, who said "I want the judiciary to... punish leading rioters firmly and without showing any mercy to teach everyone a lesson," Khatami, a member of the Assembly of Experts, said the judiciary should charge the leading "rioters" as being "mohareb" or one who wages war against God. "They should be punished ruthlessly and savagely," he said. Under Iran’s Islamic law, punishment for people convicted as "mohareb" is execution.

One must assume that Khatami is equating rioting against a corrupt President Ahmadinejad as waging war against God; surely a dangerous and heretical supposition, but then perhaps he is becoming fearful of his own position and, like a cornered snake, is prepared to come out fighting.

The fact that inflammatory words can be as destructive as weapons is not in doubt. Comments such as these will lead Iran into a bloody domestic conflict that will end in tears. The fact that these words can can come from a man of religion is even more worrying. If religious leaders promote violence, from a religious base that is supposed to preach tolerance - and by religious base I mean all religions - what hope will there ever be for the people of this world to live a life where differences are respected, where freedoms become the right of everybody, and where the ambitions of dictators are not allowed to flourish. I hope that Iran does not descend into more bloodshed on account of the words of mass destruction uttered by its supposed men of peace.

The Debate Continues: Hong Kong vs. Shanghai

2009-06-17T02:11:43+08:00

The question that seems to bother Hong Kong journalists much more than their counterparts on the Mainland of China is the one that asks when Hong Kong will lose out to Shanghai as a financial centre. Why this difference in focus exists is something of a puzzle, but suggests to me that Hong Kong has developed a real (even though unnecessary) inferiority complex, especially where China is concerned. In the meantime China - or in this case Shanghai - is openly confident about achieving its goals, and sees little of concern that might hinder its progress.

Hong Kong has been successful as a financial centre. It is something that we in Hong Kong should be proud of, while at the same time making sure that we do not rest on our laurels. But, as I have said before, we do seem to take a perverse pleasure in denigrating ourselves - in allowing our media and even our legislators to "knock" (look at the slang definition) everything in sight; particularly if the Hong Kong Government is involved.

In a meeting of the Institute of International Finance I attended in Beijing last week a highly respected friend Dr Fang Xinghai, now Director General of the Shanghai Municipal Government Financial Services Office, laid out in his usual unambiguous matter of fact style the blueprint for Shanghai's aspirations. They could not be clearer. Shanghai will be the international financial centre for China, in time, and it is even decreed by the State Council that this should be the case. Period. So, what of Hong Kong, he was asked?

"Ah", said Dr. Fang, not at all put out by the question, "in terms of financial affairs Hong Kong is essentially a separate region under one country two systems, and it surely will have its own plans".

As an aside, it has surely been clear from way back that various cities in China have had aspirations to become a financial hub - international or otherwise. Beijing, Tianjin, Dalian amongst them - but the logical place for me anyway has always been Shanghai. It has historical claims, and it remains the hub of China's mercantile trade. It has been similarly evident that Shanghai actually really wants to undertake the role of international finance centre and not merely become the centre for finance in China, although heaven knows there is probably enough business there alone to keep a financial centre busy for ever.

Okay; ball firmly back in Hong Kong's court. Do we have our own plans?

Well this, perhaps, is where the story starts to get a little blurred. Do we have a clearly articulated vision of Hong Kong as an international financial centre, in the same way that Shanghai is clearly focused? Yes we talk about it, but if you were to ask one of this City's leaders - public or private sector, about the definite plans to keep Hong Kong ahead of the competition what would they say? Would it be?

"We have a well proven financial infrastructure encompassing the best practices from around the world. We have full support services for the industry with highly professional international and domestic firms in accounting and law. We have a strong, flexible, fair, industry-friendly collaborative regulatory regime. We are open to new ideas, and will always move quickly to implement the necessary changes required to keep us up with or ahead of the competition. We have a business friendly, knowledgeable legislature that understands financial affairs and acts to protect the prominence of Hong Kong. Our relationship with China is such that we can expect to be used as a "toe in the water" for changes that might be implemented more widely in China and internationally, such as Shanghai being allowed to use the RMB as a trading currency?"

If we can say yes to every one of these things then we are at least aware of our surroundings, and are proactively working towards ensuring that we remain as an important global financial centre. If we have gaps - we must close them.

The reputation of a financial centre is as important as its ability to perform, and reputations as we all know are lost in a nano-second, but take years, decades, centuries even, to establish. Look at London, and allow me to quote selectively excerpts from Stephen Inwood's excellent book "A History of London", writing on the period from 1965-2000.

"The City, nevertheless, was a huge and long-established centre of financial services, skills, contacts and institutions...this was London's greatest single advantage" ..."an enormous number of financial institutions offering profitable and tax-efficient investments of every conceivable description" ..."London's size and reputation, along with the skills and resourcefulness of its financial operators, enable it to beat or equal Tokyo, New York and its European rivals".

We have the fundamentals, the reputation, the skills and the abilities to continue to prosper as an international financial centre. It is up to us to keep those skills finely sharpened, to maintain our track record, to be creative (within the realms of decency given global financial scandals that have affected others much more than they have affected us), and make others chase us - instead of us doing the chasing.

We should welcome the competition that will be provided by Shanghai, but I would argue that this is not a heads we lose, tails they win scenario. Can Asia, and the global financial communities indeed, withstand the presence of two major international financial centres based in China - Hong Kong and Shanghai? I would say yes. Shanghai will make it, in time, but provided we do not falter in our own endeavours and ambitions, we will be right there too.

The Rules Of Principles... or How To Labour Under A Misapprehension.

2009-06-06T16:00:00+08:00

I was brought up to believe that principles were everything. "Intent" was a defining noun. Doing the right thing, even if the "rules" allowed you to go further, was important. It has led to various debates throughout my life where my, at times perhaps, overly conservative/protectionist/reputational shield has come into play. For example, I did not think it "right" that my former employer should open a representative office in Myanmar, even if the rules allowed us, but they went ahead anyway. I closed it as soon as I was in a position senior enough to do so.

The discussion has struggled on. The "rules-based" provisions in the USA did not prevent the likes of Enron and WorldCom from going bust. The introduction of Sarbanes-Oxley "rules" has had some impact, but seemed to be more like using a sledgehammer to crack a nut - or so it became, even if the original intent was much less draconian. Rules, we said, encouraged the nimble-minded to see just how close they could get to the imaginary line created by the rules - or even assess the risk of having one foot on either side of those lines.

Principles, on the other hand were altogether more, shall we say, "lofty". More sort of, well, British. People instinctively knew what was right and what was wrong, and acted accordingly without having to resort to a "rule" book. Today, sadly, one might have to say that to trust in ones fellow human beings to act "properly" is blinkered and naive in the extreme.

Britain's ruling (for the time being anyway) Labour party has been found with an excess of moral turpitude and, to be fair, I suspect there are also a few members of the Conservative Party who have their heads very well below the parapet for fear of being branded the same way. It all started with expenses. There has been so much written in the world-wide media about how these politicians, representatives of the constituents who voted them into power, have blatantly abused the trust placed in them that I will not continue old news. "But", say these disgraced politicians, "it was allowed by the rules"! Forget the principles, people of Britain, it was in the "rule book", so it was okay.

Well, the people of Britain have had an opportunity to have their say. In the local elections held on Thursday and with results almost all in, the Labour Party has - in effect - been kicked out of Parliament, although that actual event is not going to take place until a General Election is called sometime with the next 12 months. The very people who voted for the last Government have already said "we don't want you any more. Leave."

The British Prime Minister, Gordon Brown, is I am sure an honourable man and must be bitterly disappointed at his inheritance from the rather clever Mr Blair, his predecessor, who maybe saw this coming before he left office mid-term. The Cabinet re-shuffle announced yesterday looks awful and surely the only way in which Mr Brown can salvage any dignity whatsoever is by resorting to his own strong principles.

He is presiding over a Government that lacks credibility and which the people of Britain would like to see changed - now! The message is clear - move on, or run the risk of more indignity. This is nothing to do with the financial crisis, this is all about Governance and Leadership.

Do not stick to the "rules" and hold an election at the last possible day; Do stick to your principles and do the right thing.

Market Madness.

2009-06-06T10:39:03+08:00

I am beginning (?) to sound like a stuck CD! Here he goes again, they say, casting a wet blanket over the market euphoria; making Nouriel Roubini look like an optimist. Frankly, as I have said on numerous occasions previously, I have neither been a premature pessimist nor a blind optimist - but I hope, a realist.

In the last few weeks I have watched, with mouth open, as markets around the world have shrugged off the deathly spectre of recession and carried on rising as if it was a whole new dawn. I have read the optimistic commentaries from the analysts who, time after time, have got it wrong. I have been watching the antics of those commercial banking institutions that wrote off more bad loans in the first quarter of this year than they did for the whole of 2008. And listening aghast to the investment banking community crowing about their best quarterly results in recent memory - and heralding the return of bonuses to their "hard done by" executives!

Knock! Knock! Is anyone at home?

Some years ago, I used to enjoy a writer in the SCMP called Teresa Norton who I think is still here in Hong Kong. She used to start her weekly columns with a phrase something like - "I don't know, maybe I'm nuts...". I wish I had thought of that phrase, because it's how I'm beginning to feel. Have I missed something here?

The stock market recovery has clearly taken its inspiration from the Book of Revelations and if, as I suggested you should, you took up your rights in HSBC at HK$28 per share, you will have done okay! And look, I really don't want to be the grouch, because the recovery will have helped many people - for the time being. But for every piece of front page news extolling the virtues of the market, announcing that the worst is probably over, that the green shoots are beginning to bud, there is "inside page" news about more job losses, more companies folding, more trouble for the airlines and car manufacturers. The job losses themselves adding fuel to the fire, by creating more people who can no longer pay their mortgages, auto loans and credit card debts.

The job losses in the USA last month have been greeted with relief that there were only about 325,000 of them. So, compared to the 700,000+ figures people have been used to it is better but, good grief, since when has the loss of another 300,000 jobs been something to rejoice about - with US unemployment still standing at a record high 9.4%. Not forgetting that in a few months time these latest figures could be subject to "adjustments" which are likely to go largely unnoticed.

In banking terminology when you write a cheque incorrectly, it often gets returned with the comment "words and figures differ". That's how I feel right now. Just like the multi-handed economists who say - on the one hand there is all this good news, and on the other hand there is all this bad news. Which is right?

So, I talk to people I know. People whose opinions I value and respect. I ask them to help me, as an interested observer, decipher my own thoughts and where my "gut feel" is flawed. They listen to my points of view and say they agree. In fact many have said "we've sold most of our shares and are now mostly holding cash, despite the zero interest rates". And if the market goes up any further we'll sell the rest too, they say.

More; I help out a couple of Pension Fund schemes operated for the benefit of some non-financial people. And even the Fund Managers agree with me.

Well that makes me feel better, but my self-doubt remains highly corrosive. If my mentors are in agreement, why is it that the markets seem to defy the realities of the world around us? Or is this where we came in? Markets ignoring logic, creating speculators who are out for a good time.

In a Blog I wrote in August 2007, I reminded people of the old saying related to the Stock Market - "Sell in May and go away". It would have been a good idea to heed that advice in May 2007. It seems to me it would be a good thing to do in 2009 (even in early June) - but then, maybe I'm nuts!!

I Regret The Delay...

2009-05-28T14:02:16+08:00

To those kind people that search for and read my Blog, apologies for the recent lack of content.

In the last couple of months I have journeyed extensively, through some poor islands of the Caribbean and to the North West of China. Studies in contrast in some ways - but with similarities that unfortunately are mostly apparent among the less well-off members of society. In the case of NW China, I chose not to travel with my usually present computer, which meant my ability to write new blogs was severely hampered - hence the delay in new material but it was a wise choice. In almost full back-pack mode, it would have been a hindrance in our lowly starred accommodation, (our luxury soft sleeper train beds) and "one" or "two-Imodium-Star" restaurants - and having said that none of us got sick! Meals at around US$10 (for all seven of us - NOT per head) including beverages!

If you have a chance to visit the North West - go. It is an experience, but you need someone like my Mandarin speaking, Chinese reading and writing son Paul for company. Without him we could never have made the journey other than in an organised package tour or very expensively managed private tour. He was great company, shepherding a bunch of "older people" from place to place, keeping them amused with a string of impersonations and amazing his Father with an organisational ability that was a revelation - oh, and for those who know him well, a display of patience that was remarkable. If I can persuade him to do so, I might ask him to make a "guest appearance" in the Blog, with a travel note where he can at least give his side of the story!

Meanwhile, back in the "real" world, I discover the untimely death of former President Roh in South Korea (where I am now), the North Koreans just a few kilometers away practising rather more seriously at how to extract more money from the West to save their starving population; the Dubai property market in more trouble (I go there next); a British political system embroiled in scandals over expenses fiddles, (It was all legal 'guv, honest, but I'll step down at the next election!); an ever upwardly creeping stock market that is assumed to indicate the "worst is over" - while tucked away in the back pages there are more banks failing, car makers going to the wall and sundry other bad news; And if that is not enough, my other son wanders off into the deserts of Namibia to run for 250km on his 4th "Racing the Planet" jaunt (one as a volunteer) only to return with blisters under each toenail and having had to drill through a couple of them to release the pressure so he could finish a race that saw 25% of the field drop out. I am sure madness must come from the other side of the family!!! (Still, at least his favourite charity will benefit, courtesy of some kind donors).

Think I'll head back to Kashgar!!

And the point of all that? I have a few opinions to share and now I am back, I'll get on with it!!

Britain 0 - Netherlands 1.

2009-05-06T17:50:57+08:00

Score line? Sort of, I suppose.

In my last note I was bemoaning the sneaky underhanded increase in airport taxes in Britain - already the highest in the world.

However, did I mention that if you can escape from Britain by sea or through the Channel Tunnel, and continue your journey from somewhere else in Europe, you will be spared the high British taxes? And if you fly a short distance like Amsterdam, the tax is not so high as longer distances, like Hong Kong.

So guess what the Dutch have just announced? Yes, they are abandoning airport departure taxes entirely! Funny that, and a real kick with a clog in the Schiphols for Messrs Brown and Darling.